Financing resilience at the subnational level in South Africa 22 JUNE 2014 STANDING COMMITTEE ON FINANCE FORUM, MONTEGO BAY, JAMAICA
My key takeaways from 21 June 2014 1. Improve access to finance through well articulated domestic enabling environments 2. Increase capacity for climate risk and opportunities 3. Adopt a supply chain approach through use of existing incentives 4. Improve understanding of adaptation finance in context of private sector 5. Use national financing mechanisms to create space for climate budgets and implementation 6. Use a systems approach to address issues around the project that affect implementation 7. Work at different levels to improve effectiveness of adaptation interventions 8. Interesting innovations in financial instruments to address wide spectrum of response 22 June 2014 2
South Africa has strong foundations in place to translate the climate science into policy at the national level Planning & Policies National Climate Change Response Policy Low emission & climate resilient development National development plan (2030) Strong environmental management legislation Existing Initiatives Expanded Public Works Programme water, fire, land use, rivers, energy South African National Biodiversity Institute rich data sets on biodiversity South African Weather Services predictive capacity for disaster management Private sector & academia partners with government institutions Opportunities to mainstream resilience Flagship Programmes Long Term Adaptation Scenarios Strategic Infrastructure Projects (SIPs) procurement U$80 bn infrastructure spend 3 year budget procurement (PPPs) Recent private sector funding for renewable energy programme 22 June 2014 3
Progress on financial mechanisms & partnerships with private sector is emerging but much more is needed for scale of action required National financing mechanisms & facilities Adaptation Finance under UNFCCC Opportunities for innovative financing Public budgets assigned to EPWP programme & sector specific Drylands Fund (land use management) National Green Fund (programmatic based low emission & resilience) Cities Support Programme with climate window Private finance sometimes hidden as technology/resource improvements Adaptation Fund NIE SANBI Global Environment Facility NIE Development Bank of Southern Africa Bilateral and multilateral lines green credit facilities with technical assistance Majority of support is for mitigation activities less than 10% for adaptation Private sector partnerships with local municipality on improving resilience Early engagement on payment for ecosystem services Use of potential carbon tax revenues 22 June 2014 4
Each municipality requires a unique response and therefore flexibility and grass root approaches more evident and the call for greater access to finance more urgent Strategic objective Project sponsors #1 Reforestation #2 Resilient infrastructure Environmental management & response to adaptation: erosion Internal Environmental Protection & Climate Change Programme Environmental management & disaster response strategy: flash floods impacting road and other infrastructure Multi stakeholder sponsors including government, NGOs, business and community Amount funded $1.5 million $2.1 million Sources Grants from development agency Provincial & municipal budget (ongoing) Corporate sponsors Grant from National Green Fund i) private sector insurer, ii) multilateral & CSO GEF & WWF, iii) development partner CSIR, iv) government SANBI, Dept of Waters Affairs & Municipal Infrastructure Grants 22 June 2014 5
Reflections from these case studies Strong project champions lead initiatives despite shortage of resources Shortfall in capacity to initiate and implement at municipal level for ongoing efforts Lack of funding available to conduct critical science based research need partners Embedding resilience into budget applications vs. risk aversion by sub national Treasurers Ambitious sub national government but major disparities in skills and capacities (283 munis) Funding is mainly grant based or technical assistance linked to wider mitigation objective Private sector willing partner where they can identify the risk to their operations Access to climate finance less fragmentation, clearer processes, more access 22 June 2014 6
Key lessons learnt by project sponsors #1 Reforestation #2 Resilient infrastructure Mainstream climate change into existing development priorities, Leverage events and existing networks within and outside of gov t to promote project Initiation of project from economic branches with technical support from Environmental branches Business case important identifying the socio economic context Building trust with stakeholders Winning support from private sector to crowd in capacity and resources Process should be structured to obtain buy in by executive leadership 22 June 2014 7
International Negotiation Context: High level outcomes that are sufficiently wide to interpret national actions National Implementation Context: End goal is to improve livelihoods, reduce risks and contribute to economic, social & environmental well being International agreements Communities National policies Sub national implementati on Sub national access & impact National mandates Communities Ownership Access Impact International translation into national realities 22 June 2014 8
Thoughts for SCF work on financing adaptation 1. Important to maintain healthy tension between international and implementation contexts 2. Significant funding is needed for delivery of benefits over different time scales 3. Reframing adaptation as an investment in development resource scarcity? investment 4. Adopting a systems approach is very helpful as it addresses down and upstream blind spots 5. Access to predictable and relevant funding regardless of source/ convention 6. Private sector debunking very good at pricing risk e.g. hidden categories of spend 7. Response margins for resilience is broad need wide spectrum of financial instruments 8. Biennial Assessment vs. Country reports need for comparison to inform further progress 22 June 2014 9
Thank you for your attention. chantal@thomasgresham.co.za +27795048724 Johannesburg, South Africa 22 June 2014 10